January 19, 2016
The richest 62 people on earth now have the same wealth as the poorest 3.6 billion, according to a report from Oxfam.
Five years ago, the majority of wealth was in the hands of 388 individuals. As the global population increased by around 400 million people, the wealth of the poorest half of the world has fallen by 41 percent - a drop of about $1 trillion.
That means more money, assets and wealth shifted to fewer people.
Oxfam is an aid organization working to fight poverty and hunger around the world. The group reported that women are more affected than men by inequality. The majority of low paid workers around the world are women. Just nine of the richest 62 individuals are women, the aid group says.
It said the differences between the very rich and everyone else has widened over the past 12 months. It said Oxfam predicted last year “the 1 percent would soon own more than the rest of us.”
That happened a year earlier than expected, in 2015, the report said.
The use of tax shelter
Oxfam considers tax shelters for the wealthy the biggest problem.
The group said “rich individuals and companies” hide their wealth in countries where they can pay less tax on their earnings. This is tax money that governments need “to tackle poverty and inequality.”
“It is simply unacceptable that the poorest half of the world’s population owns no more than a few dozen super-rich people who could fit onto one bus,” said Winnie Byanyima, Oxfam International’s Executive Director.
The report said about $7.6 trillion of individual wealth is kept in “offshore” banks. They give the wealthy a rate of return on their investments that is higher than the economic growth rate in many countries.
Oxfam said taxes on the wealthiest income would add an extra $190 billion to governments every year.
“As much as 30 percent of all African financial wealth is estimated to be held offshore, costing an estimated $14 billion in lost tax revenues every year,” it added.
“This is enough money to pay for healthcare for mothers and children in Africa that could save 4 million children’s lives a year, and employ enough teachers to get every African child into school,” it continued.
The report comes a few days before the World Economic Forum opens in Davos, Switzerland. The WEF is a non-profit organization. It invites about 2,500 business leaders, politicians, thinkers and journalists to discuss issues like world poverty and economic growth.
Talk among world leaders “about the escalating inequality crisis has so far not translated into concrete action,” the report says.
“The world has become a much more unequal place and the trend is accelerating. We cannot continue to allow hundreds of millions of people to go hungry while resources that could be used to help them are sucked up by those at the top.”
Oxfam noted that had inequality within countries not grown between 1990 and 2010, an extra 200 million people would have escaped poverty.
It said governments should “recover the missing billions lost to tax havens” to pay for healthcare, schools and other public services for the general public.
Governments should move minimum wage rates “towards a living wage” and tackle “the pay gap between men and women.”
Byanyima added, “The richest can no longer pretend their wealth benefits everyone – their extreme wealth in fact shows an ailing global economy. The recent explosion in the wealth of the super-rich has come at the expense of the majority and particularly the poorest people."
Oxfam said global wealth was calculated by Credit Suisse Global Wealth Datebook (2013 and 2014) and Forbes’ billionaires list published in March.
Not everyone agrees with the report
The Institute for Economic Affairs in London called the numbers in the report “meaningless and misleading.”
Mark Littlewood, director general of the IEA, said that, “global capitalism has eradicated poverty and generated prosperity in the developing world at an unprecedented rate.”
Tim Worstall, a Fellow at the Adam Smith Institute in London, and a blogger for Forbes magazine, disputed the Oxfam report.
What the Oxfam report is “complaining about isn’t very important and we’ve already solved it anyway,” he said. “We don’t actually need to do anything therefore, need no public policy over something we’ve already solved. ... Global demographics are such that the global labor force is going to shrink from now on. Thus the return to labor will rise. We’re done.”
I’m Jonathan Evans
Words in This Story
inequality -- adv. unfairness, favoritism toward one thing, a lack of fairness
dozen -- n. 12
offshore – n. definition
escalating -- v. going up or higher, increasing in height
concrete -- n. a building material that begins as a liquid and dries to a solid
accelerating -- v. going faster, increasing in speed
minimum -- n. the lowest or least amount
prosperity -- n. thriving, gaining, increasing in wealth or comfort
demographics -- n. the categories of a population that show age, income, education, etc.